Fitch, a credit ratings international organisation has disclosed that the Central bank of Nigeria (CBN) under President Muhammadu Buhari might drag the Nigerian economy in crisis due to mismatch in economic policy management.

In the latest report released by Fitch, titled Nigeria’s Unconventional Policies Aggravate External Vulnerability, the organisation stated that the CBN’s recent attempt to boost economic activity through giving incentives to banks’ lending had clashed with the goal of maintaining a stable exchange rate, and this is not good for the economy.

Uncoordinated policies: Fitch noted that the CBN’s policy moves to reconcile competing goals through unconventional macroeconomic management and weaknesses in policy settings were raising medium-term vulnerabilities to shocks, and this could expose the economy more to falling oil prices or disruptions to hydrocarbon production.

- According to the report, tight management of domestic liquidity had been the key pillar of Nigeria’s exchange-rate policy in recent years.

- However, the recent measures to boost lending have contributed to a temporary loosening of domestic financing conditions. This has combined with falling oil prices and deteriorating investor sentiment towards emerging markets to put pressure on the naira.

- Specifically, one of the major policies cited by Fitch is the policy implemented in July, which includes a requirement for banks to have a loans-to-deposits ratio of at least 60% by the end of September and tighter restrictions on the amount of remunerable deposits that banks can park at the Central Bank.

Macroeconomic Pressures: Also, it was stated that exchange rate movement pressured the CBN to resume its liquidity tightening operations in August by auctioning Open Market Operations (OMO) bills, and to increase the supply of foreign currency, releasing about $800 million from its foreign-currency reserves between mid-July and mid-August.

- According to Fitch, these moves by the CBN have contributed to a rebound in domestic interest rates and limited the depreciation of the naira on the Investors’ and Exporters’ FX Window by 1% since the end of June.

- Hence, Fitch noted that the competing goals of preserving naira stability and supporting Nigeria’s fragile recovery were pushing the CBN towards increasingly complex policy measures, with a risk of aggravating external vulnerability or causing macroeconomic distortions.

- Fitch stated that the CBN’s policy of auctioning OMO bills to non-residents had led to a rapid build-up of short-term external liabilities with non-resident holdings of these bills amounting to $15.8 billion (4% of GDP) at end-April, equivalent to a third of reserves. This generates meaningful rollover risks, which could necessitate persistently high-interest rates, holding back growth and increasing the government’s debt-servicing costs

FOREX restriction on milk and food items: Fitch identified CBN’s recent move to intensify restrictions on FOREX access for imports that were imposed in 2015. While the President of Nigeria, Muhammadu Buhari, recently called on the CBN to end FOREX for milk importers, the President has also announced restriction of FX access for all food imports, but according to Fitch, the scope, modalities and timeline of such measures remain unclear.

Also according to Fitch, FX restrictions are unlikely to foster expansion in the domestic food supply, as Nigeria’s agricultural and food sectors suffer from deep-seated challenges from infrastructure gaps, communal conflicts, insecurity and weather hazards. Instead, these restrictions could push more traders towards the informal economy and compound inflationary pressures.

On Nigeria’s inflation, Fitch noted that Nigeria’s Inflation at about 11% already raises the risk of an overvaluation of the real effective exchange rate, which could put more pressure on the naira and increase the risk of a sharp adjustment following an oil price shock. Withdrawal of portfolio investors would aggravate the potential balance of payment pressures.



https://nairametrics.com/2019/08/28/buharis-cbn-policies-may-drag-nigerian-economy-into-crisis-fitch/

Noooo PMB is d best thing to have happened to dis country since afta jollof rice.. All d policy somersault is caused by d PDP and GEJ and presently by Atiku... Infact Igbos are responsible for d policies not working as dey are supposed to.. D policies are actually working perfectly jus dat it's effects are so bright we can't see it yet

Their entire write up, proposition and analysis doesnt have, RUga, or FUlani in it, therefore it would be ignored by the FG

Ok

This is total nonsense.

As stupid as this govt is, this policy of easing on borrowing is not a bad idea towards stimulating investments and consumer spending. The only thing the CBN has to do is reduce lending rates so as not to over inflate the economy.

These useless banksters have double standards when viewing developing and western economies.

The Federal reserves has a 0% lending rate for banks and loan rates are hovering at no more than 3% and 15% for business and consumer loans respectively.

Buhari is a dunce, agreed but these jew rat banksters need to be ignored.

Can someone brief me?

Before nko?

This december go dry like stock fish.

Nigeria is already in crisis....... dullard doesn't seem to know because no be picture of dead cow his ministers dey draw for reports that they forward to his table...!

:
Savage or Idiot?

Nbote:
Noooo PMB is d best thing to have happened to dis country since afta jollof rice.. All d policy somersault is caused by d PDP and GEJ and presently by Atiku

Do you agree that Buhari is the worst President ever in Nigeria

Buhari my president

Ok. Fingers crossed.

Buhari again

Who cursed Nigeria with this dullard of a president

We are tired of this dullard..

He should just go..

The Dullard is the worst leader mankind has ever seen ..Zero vision, zero charisma , 100% ineptitude 100% anti growth

He knows not.

Nbote:
Noooo PMB is d best thing to have happened to dis country since afta jollof rice.. All d policy somersault is caused by d PDP and GEJ and presently by Atiku

but make we talk truth small, GEJ fucck up too. Our leaders are mad people. their brains wear torn rags.

Buhari by default is on 'auto-reverse'

Well, do I blame him? No, in a country of 190 million people, it's someone who doesn't have certificate we called to lead us.

It's like telling Musa who just started his 'motor-boy' apprenticeship to drive a truck carrying 30 tons (600 bags of cement) of cement to Kano. And you think he won't wreck the vehicle along the way.

But the zombies wouldn't agree, they follow blindly. Everything Mr integrity says is right.

Next level

Everything about our so called buhari is crisis so am not surprise!

When you down already you can't go down the more na

Welcome to the next level

APCHaram:
This is total nonsense.

As stupid as this govt is, this policy of easing on borrowing is not a bad idea towards stimulating investments and consumer spending. The only thing the CBN has to do is reduce lending rates so as not to over inflate the economy.

These useless banksters have double standards when viewing developing and western economies.

The Federal reserves has a 0% lending rate for banks and loan rates are hovering at no more than 3% and 15% for business and consumer loans respectively.

Buhari is a dunce, agreed but these jew rat banksters need to be ignored.

dumb

Who doesn't know?

Only NL Zs.

Another sponsored rubbish just becos there is no money to launder for corrupt Nigerian again.

So it's by importing food and everything without producing nothing that our economy will grow

China last month devalue her currency to combat unhealthy trade game US was playing.

I laughed when I read d rubbish premium time wrote which they called investigative journalism. It wrote the money found was proceed of crude allocation given to Supreme council by Abacha.

How does what is given to group of people by head of state turn to stealing

Then it was asking why was he not prosecuted? Paid nonsense. Spit.

Meanwhile the same obj allocated oil well to girlfriend

Provided amala and ewedu is made available for us, We Yoruba Moslems are willing to vote in our Lord and Master for the third term

wetin the cow know?

Ok....presidency should act as fast as possible to avert this pending loss.

Our currency(Naira) is devalued already.

Buhari promised to make 1 Dollar to be equivalent to 1 Naira....

But since 2015,The exchange rate of dollar to Naira keeps on increasing.

Well, my people do you need Original pure honey?

Call or whatsapp me on 081 0166 6771